Increasing Customer Loyalty With a Mobile Banking App| By |Andrei Khomushka

Though strong, loyal relationships usually pay off, winning customer loyalty can be a tough task for banks as the definition itself is rather vague and businesses can easily take just a satisfied customer for a loyal one. So let’s refresh the basics to see the differences in their meaning.

How to tell apart loyal from satisfied customers

Customer satisfaction is a measure of how products and services supplied by a company meet or exceed customers’ expectations. This notion reflects how much customers “like” a bank and how happy they are with the services it provides. On the other hand, customer loyalty shows the degree of a customer’s intention or predisposition to get services from the same business again as well as recommend the bank to others.

However, banks should realize that customers may get back due to situational constraints, such as a lack of viable alternatives, but this so-called “spurious loyalty” has nothing to do with the true brand loyalty. The most representative feature of customer loyalty is that people not only become continuous customers, but also choose the same bank even if other providers have better offers. In this regard, fostering customer loyalty implies a truly strategic vision from a bank, while improving customer satisfaction requires rather tactical actions. True loyalty is much harder to earn than satisfaction as it takes exceeding customers’ expectations on a regular basis.

As a consequence, not all banks can successfully achieve customer loyalty, which is confirmed in the latest IBM research. According to the study, banks overestimate their ability to encourage strong customer loyalty – while 48% of banks believe they are doing a good job to win customer loyalty, only 35% of customers agree with this statement. Ultimately, it means that if a bank doesn’t work on customer loyalty consistently, it can cause customer churn and as a result bring revenues down. That is why banks should search for all the opportunities to increase customer loyalty. One of these opportunities is going mobile.

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How mobile banking app can boost loyalty

As stated in a recent Bain & Company research, banking customers who are frequent mobile users are 40% less likely to switch banks than those who rarely use mobile. This data underlines a direct impact of mobile banking on customer loyalty and makes the mobile banking option a vital factor in a consumer’s decision to go with one bank or another.

A mobile banking app can create strong emotional ties between a bank and a client. For example, banks can demonstrate their true customer care by helping customers solve their daily financial needs without visiting a branch. And if banks are ready to introduce a mobile app with features that assist with tracking and reaching personal financial goals, customers will feel treated as special and respected. All these factors together with the aesthetic aspect achieved through a friendly UX interface, make a mobile banking app a potentially powerful and convenient tool to gain customer loyalty.

Thinking about the customer

Based on our experience in mobile banking solutions, we came up with the following approaches that can lead to increased customer loyalty:

  • Keeping up ongoing conversation. While some banking executives may think that mobile banking doesn’t allow for the same personal interaction as at physical locations, the opposite is true. With the possibility to hold a 24/7 conversation, banks are able to get closer to customers. Besides, when used to its best advantage, online mobile banking can make a positive shift in customer communications. Instead of merely providing financial information, banks can move to the next level and establish a constructive dialogue with customers through online customer support, sending relevant notifications and alerts such as a pre-approved overdraft extension, etc.
  • Helping customers stay on track with their financial goals. Banks should also aim at making their mobile app a handy tool to meet customers’ financial goals, such as saving funds to buy a car or a house. While only 10% of banks currently offer personal financial management in their mobile apps (Federal Reserve Bank of Dallas), some nonbank players like Mint andLevel Money have become leaders in this niche. Banks’ mobile apps usually just group users’ expenditures in certain categories (monthly bills, mortgage, grocery etc.), whereas nonbank solutions are more informative and even show personalized financial advice based on users’ spending habits. Therefore, banks must realize that such companies may threaten their status as customers’ primary source of financial insights and advice. To retain loyal clients, banks should help customers track their financial goals with a mobile app, otherwise customers can slip away to other players providing financial services.
  • Facilitating sign-up to new products. Those customers who turn to their mobile banking solutions for financial advice and product recommendations should have the possibility to sign up for new products right from mobile devices. While it may require filling in a lot of documents, which is annoying, banks can optimize this process by scanning all the necessary information with the mobile phone camera just as they do it with check deposits.

Encouraging true “raving fans”

To turn satisfied customers into true “raving fans” requires a lot of efforts and patience. Craving to improve customer loyalty, banks can turn to one of the most technologically savvy tools – a mobile banking app. Using a mobile banking solution, customers can create close emotional ties with their bank as well as feel the bank’s care and respect. These feelings can be further nourished by banks’ regular monitoring of customers’ needs and introduction of new relevant features into their mobile apps.

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